Government is looking to raise long-term funds from the insurance industry to finance various capital-intensive projects that require an estimated US$1.7billion over the next ten years to address, the Finance Minister Seth Terkper has said.

Speaking at the 37th annual ordinary meeting of the Africa Reinsurance Corporation, the minister said prospects of the country’s insurance and reinsurance sector go beyond risk management and financial security to families and businesses.

“The insurance industry is one area that when properly harnessed can become a key source for mobilisation of much-needed funds for long-term investments and employment creation.

“The contribution of the insurance and reinsurance industry to economic development cannot be over-emphasised; when properly harnessed, the sector will be able to support national economic transformation efforts,” he said.

The Finance Ministry estimates that the huge infrastructure deficit in the country requires a sustained spending of about US$1.7billion annually over a ten-year period to address. Central government, however, lacks funds to execute the projects.

The insurance industry players, he said, need to deploy product diversification; work along the highest standards of the profession; and develop strategies that will position them to meet the current market dynamics so as to contribute significantly toward economic growth.

“The low insurance penetration and other related constraints provide opportunities for sector development. For instance, there is a need for increased general and life insurance products that can promote the national transformation agenda; this may require products in the areas of health insurance, micro-insurance, agricultural insurance and related ones that can reduce poverty and promote small and medium enterprises,” he said.

Regulator of the industry, the National Insurance Commission, has equally been calling for a vibrant insurance industry that could cushion the pressure on government, especially in the area of infrastructure financing. Commissioner of Insurance Lydia Lariba Bawa, speaking at the same event, said the sector can contribute significantly to national growth if the perennial problem of capital flight, low penetration and inadequate capacity are ironed-out.

She called on sector actors to continue rolling-out suitable and innovative products that target the informal sector as it was the only way to growing the domestic and the regional market.

“Insurance penetration in the country and most sub-Saharan African countries is below two percent, mainly because most insurance products and services in the region are shifted toward the formal sector businesses.

“But the irony is that the majority of the region’s population operates in the informal sector; they usually do not earn regular incomes nor operate a bank account. Until we find suitable ways of reaching out to such people, it will be extremely difficult to grow penetration,” she told the gathering of chieftains from the insurance and reinsurance business.

Africa’s reinsurance market takes up 0.8 percent of the world share in direct premiums, compared to 2.8 percent for Latin America and 10.7 percent for emerging markets -- representing US$6.4billion, US$21.9billion and US$83.7billion in revenues respectively.

The Africa Reinsurance Corporation recorded a net profit for 2014 stood at US$118million, representing a 40 percent increase in the previous year’s figure of US$84million.

The corporation also grew its premium income by seven percent to US$718million while investment income and income from other sources, including interests on reinsurance deposits, stood at US$50million -- up from US$46million in 2013.